How A $10 Million Fraud Blossomed Inside Microsoft

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REDMOND, WA — In an interview with a Microsoft security investigator last spring, Volodymyr Kvashuk remarked that he didn't think that gift cards were "real" money.

But according to federal investigators, Kvashuk's theft of some $10 million in gift cards allowed him to buy very real things, like a $1.5 million home along Lake Washington in Renton, and a $160,000 Tesla.

Federal investigators this week charged Kvashuk, a former Microsoft engineer who earned a $116,000 salary, with mail fraud. The U.S. Attorney's office in Seattle says that Kvashuk was able to exploit a weakness in Microsoft's internal security system, and was only caught when the company noticed a spike on Xbox gift card sales.

The fraud began in 2017, when Kvashuk was working on a team that tested Microsoft's online retail store, according to court documents. His job was to use dummy accounts linked to empty credit card accounts to make purchases of physical goods from the online store. The accounts were set up in such a way that no goods would ever actually be delivered.

But the system did not anticipate that a tester would try to buy virtual currency, and so there were no safeguards to prevent it, according to court documents. Kvashuk noticed this weakness, and began using his test account — and his coworkers' test accounts — to buy gift cards. Investigators allege he bought about $10,000 worth between April and October 2017, and used the currency to make purchases on the Microsoft store.

Then the fraud escalated. On March 23, 2018, Kvashuk bought about $10 million in virtual currency, according to investigators. He resold those gift cards on third-party websites and kept the proceeds for himself, according to investigators. He also used the virtual currency to buy Bitcoin, and then sold that for cash, according to investigators.

In total, Kvashuk earned about $2.8 million from the scheme, investigators say. He's facing a mail fraud charge, which carries a maximum sentence of 20 years in prison and a $250,000 fine.

https://www.msn.com/en-us/money/news/how-a-dollar10-million-fraud-blossomed-inside-microsoft/ar-AAECn4N

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1. Crooked Idiot.